April 28: Impact of US-Iran War on International Economy, Financial Markets, and Daily Life

The US-Iran war is impacting nations globally. The Bank of Japan (BoJ) has lowered its economic growth forecast for the 2027 fiscal year to 0.7%, and India's economic growth for the first half of the 2027 fiscal year is also expected to slow down. Germany, Europe's largest economy, is also suffering, with Chancellor Friedrich Merz criticizing the United States for a lack of strategy in the war.

BoJ Raises Inflation Forecast, Keeps Interest Rates Unchanged Due to surging oil prices caused by the war, the Bank of Japan decided to keep its benchmark interest rate unchanged at 0.75%, while significantly raising the inflation forecast for the 2026 fiscal year from 1.9% to 2.8%. Furthermore, the BoJ lowered the 2026 growth forecast from 1.0% to 0.5% and the 2027 forecast from 0.8% to 0.7%.

India's Economy Affected by Middle East War; Nomura Predicts Short-term Slowdown The Middle East war is impacting India's economy. According to Nomura Securities, India's GDP growth is expected to slow to between 6.3% and 6.7% in the first half of the 2027 fiscal year, though it is expected to recover to 7.1%-7.2% in the second half. The annual growth rate is estimated at 6.8%, lower than the 2026 fiscal year estimate. Nomura believes India's growth remains resilient despite constraints in manufacturing and services, due to policy easing and easing trade tensions with the US.

Germany's Oil Price Controls Fail to Benefit Consumers German Minister for Economic Affairs Katherina Reiche announced oil price controls in March following Iran's blockade of the Strait of Hormuz, which disrupted 1/5 of global oil and gas supply. Stations were limited to raising prices once daily. However, studies by the ZEW Institute and DICE found this increased retailer profits by 5-6 cents per liter as prices spiked at noon and fell slowly, reducing low-price windows for drivers.

German Chancellor Criticizes US War Strategy Chancellor Friedrich Merz stated on the 27th that he sees no short-term exit strategy for the Iran war, saying the US is being 'played by Iran' and the poorly prepared war is hurting Germany's economy. The Ministry of Economy was forced to halve its growth forecast for this year to 0.5%.

US Warns of Sanctions as Tehran Resumes Commercial Flights US Treasury Secretary Scott Bessent warned that the US will sanction individuals or entities dealing with sanctioned Iranian airlines as commercial flights resume. He urged foreign governments to ensure their companies do not provide fuel, catering, or maintenance to these aircraft.

Airlines Cut Flights Due to Rising Fuel Costs Surging jet fuel prices have forced budget carriers like Ryanair, Transavia, and Volotea to cut flights. Budget airlines, which control over 1/3 of the global market, are the most sensitive to cost pressures due to their low-fare models.

Insurers Require Iranian Permits for Strait of Hormuz Transit Insurance broker Marsh stated some insurers now require Iranian approval for vessels to obtain 'war risk' insurance, reflecting the high uncertainty in the Strait of Hormuz.

Strait of Hormuz Traffic Sparse; Iranian Tankers Turned Back Reuters reported that six tankers carrying Iranian oil were forced to turn back due to the US blockade. The US announced its blockade of Iran-affiliated shipping on the 13th, and since then, 37 vessels have been turned back.